If the Fed is going to act at all, it would have to do so
before June to avoid meddling in the political calendar.

There remains economic slack, and despite how others may
feel, inflation is still below the Fed's target rate of 2%

Core FOMC members are still not seeing robust economic
growth, and Reinhart agrees this is unlikely to change soon.
"Anxiety-inducing headlines that the economy is losing steam
would be conducive to Fed action," he writes.

Therefore, at either the April or June meetings, Reinhart
predicts there is likely to be a third round of treasuries
purchases, in the range of $500 billion to $700
billion.

But that's not the move he'd pull if he were in charge.

Reinhart argues that a better play would be to "expand the scale
and scope of the existing program." In other words, Operation
Twist 2.

Reinhart's sequel involves extending the current purchasing
program through the end of the year, which would cost about $400
billion. It would also involve selling shorter-term Treasuries
and initiating what Reinhart calls "temporary reserve-draining
operations."

While Reinhart puts the chances of the Fed not acting at one in
four, he argues the Fed will seek to preempt any chance that the
current mini-rally ends.

And he cites Ben Bernanke's unique relationship with energy
prices as an indicator of where his mind's at:

"Chairman Bernanke's academic work on the strong post-WWII
association between energy price spikes and subsequent recessions
puts part of the blame on the Fed's historical response. As
long as inflation expectations are well anchored, the strong
conclusion is that the central bank should ease policy to counter
the blow to aggregate demand. Thus, the recent rise
in oil prices and the risk that they go higher likely inclines
the Fed to do more, not less."